1 Top-Notch Canadian Stock Down 30% to Buy for Immediate Dividends

Looking for immediate dividends? Here’s one long-term option that boasts a 5% yield while trading at a hefty discount right now.

The market is full of great long-term opportunities. Some of these are focused on long-term growth, while others can provide decades of juicy income. But what about catering to both? Is there a stock that can provide growth and immediate dividends?

The answer to that question is a solid yes, and that stock also happens to be trading down nearly 30% in the trailing 12-month period.

some REITs give investors exposure to commercial real estate

Source: Getty Images

Meet your next Canadian dividend stock to buy

That stock for investors to consider for immediate dividends is BCE (TSX: BCE). BCE is one of the largest telecoms in Canada, meaning that it offers some defensive appeal in addition to its income-earning potential.

That defensive appeal stems from the business model that telecoms like BCE adhere to. In short, telecoms like BCE offer subscriber-based services that generate a reliable revenue stream from customers.

That includes wireless, wireline, TV and internet segments. Interestingly, in the years since the pandemic ended, the necessity of both the wireless and internet segments has only increased, furthering the already impressive defensive moat.

Why is BCE trading down?

If BCE offers a defensive and increasingly necessary business, why then is the stock trading down nearly 30% over the trailing 12-month period?

Telecoms are expensive businesses to run. Upgrading the massive infrastructure takes time and significant investment, which is often financed through debt. And when interest rates rise (as they did several years ago), the cost of carrying on those enhancements increases, too.

This ultimately stifles future investment, puts cost pressure on current businesses, and leads to harsh, difficult, yet necessary cuts.

At BCE, those cuts started to hit over the past year. They included selling off a variety of media assets and trimming staff costs in one of the deepest reductions in decades.

BCE even sold off its multi-billion-dollar investment in MLSE, and slashed its cherished dividend by a whopping 56%.

The efforts did help stop the bleeding, as witnessed in the most recent quarterly update.

In that quarter, BCE reported net earnings of $683 million, reflecting a whopping 49.5% increase over the prior period. Free cash flow also increased significantly, coming in at $798 million.

What’s next for BCE?

BCE slashing its dividend doesn’t exactly scream “buy for immediate dividends”. Fortunately, there are other developments at BCE that do warrant some excitement.

BCE’s dividend currently sits at an annualized $1.75 per share. Given the current (still discounted) stock price, that works out to a still-impressive 5.8% yield.

This means that long-term investors who have an appetite for some risk can get a long-term gem (and the immediate dividends it offers) at a hefty discount.

In fact, given the current yield, investors who allocate just $10,000 into BCE (as part of a larger, well-diversified portfolio) will generate over $530, which can purchase more than a handful of shares through reinvestment.

Turning to growth, BCE’s sale of its MLSE holdings wasn’t only to pay down debt. In fact, the company used those funds for growth. BCE acquired U.S.-based Ziply, a fibre operator in the very underserved Pacific Northwest market.

To say that the growth potential for BCE in that segment is huge would be an understatement.

BCE: Buy for immediate dividends (and some growth)

BCE has all the components to become a stellar long-term growth play with the benefit of a juicy dividend. The company’s turnaround is already bearing fruit, and the Ziply acquisition comes with long-term appeal.

Throw in a juicy dividend, a defensive operation at home, and the prospect of interest rates finally coming down, and you have a stellar investment.

In my opinion, a small position in BCE, as part of a larger, well-diversified portfolio, is warranted.

Fool contributor Demetris Afxentiou has positions in BCE. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

man shops at grocery store
Dividend Stocks

A High Dividend Yield Can Be a Warning Sign: Here’s Why

A high dividend yield can signal trouble. TELUS and Slate Grocery REIT show why investors should examine what supports their…

Read more »

Real estate investment concept
Dividend Stocks

Paying Off the Mortgage or Saving for Retirement First? A Guide for Your 40s and 50s

Find out how rates, renewals and tax rules shape your choice in your 40s and 50s, and where blue chip…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

$14,000 in a TFSA: 2 Stocks I’d Buy for Meaningful Monthly Cash Flow

Cardinal Energy (TSX:CJ) and another monthly income play that's fit for those seeking huge dividends and deeper value.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How to Use a TFSA to Generate an Average of $500 in Monthly Tax-Free Income

Unlock the potential of a TFSA for tax-free savings. Discover strategies to generate income while minimizing taxes for the future.

Read more »

senior man smiles next to a light-filled window
Dividend Stocks

This Stock Pays You a 4.7% Dividend Every Single Month

Sienna Senior Living's seemingly safe 4.7% monthly dividend yield, eligible dividend tax perks, and strong growth potential appear attractive today

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

Most Canadians Pick the Wrong Investing Account First: Don’t Be One of Them

Your first investing account matters far more than your first stock. Compare the TFSA, RRSP and FHSA for 2026 and…

Read more »

money goes up and down in balance
Dividend Stocks

Building a Retirement Paycheque: Where Each Dollar Comes From

Thinking about retirement? Find methods to create passive income to cover daily expenses and enhance your financial freedom.

Read more »

Three children jump on an outdoor trampoline
Dividend Stocks

The RESP Deadline is December 31: Ottawa Adds 20% for Free

An affordable RESP contribution can attract a 20% basic grant, with December timing, catch-up limits, and the child's age shaping…

Read more »